US Labor Dep’t: NC unemployment plan would cut off 170,000 from jobless benefits

The Obama Administration’s federal labor department says the plan to overhaul North Carolina’s unemployment insurance system would kick 170,000 jobless off of benefits this summer, and have the state’s economy miss out on $780 million in federal funds.

Previous estimates put the number of those immediately affected at 80,000.

Acting U.S. Labor Secretary Seth Harris released a statement late Monday saying that the federal agency doesn’t have the power to stop the Rebublican-led N.C. General Assembly from moving forward with the plan, but cautioned that families stand to be hurt by it.

The N.C. Senate is ready to move this week on House Bill 4, which proposes to pay off debt the state took on during the height of the Recession by reducing the amount of unemployment benefits workers receive and raising the amount employers pay. Critics of the plan, including the N.C. Justice Center, say the reform unfairly puts the burden on the backs of workers, while businesses that enjoyed years of tax cuts that led to the crisis in the system will walk away bearing a fraction of the cost of righting the system.

The North Carolina legislature is considering legislation that would reduce state Unemployment Insurance benefits. If enacted, the legislation also would cut off all federally funded Emergency Unemployment Compensation — that is, benefits after 26 weeks of unemployment — to 170,000 unemployed North Carolinians. This cutoff is automatic under federal law. I have no discretion to stop it. As a result, families struggling to secure their place in the middle class will suffer a grievous blow, and the state’s economy will lose $780 million in federal funds that are vital to reducing North Carolina’s high unemployment rate.

We know that for every dollar spent on Unemployment Insurance benefits, nearly two dollars are generated in the local economy. Unemployed workers and their families spend these benefits in local grocery stores and small businesses, and use them to stay current on mortgage or rent payments and utilities. For these reasons, UI programs are vital to economic growth in difficult times, particularly in states like North Carolina with high unemployment rates.